“Taxi!” for 3D shape marks: London Taxi Company

11 March 2016

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The High Court handed down a decision in a case that deals with a wide spectrum of intellectual property issues, including average consumer assessment, validity of 3D shape marks, trade mark infringement and passing off. What is particularly interesting about this decision is that it highlights the difficulty of enforcing trade mark registrations in respect of 3D shape marks.

Latest update to this case: appeal dismissed

In November 2017 the Court of Appeal dismissed The London Taxi Corporation's appeal.

Background

The claimant, the London Taxi Company (LTC), was proprietor of trade mark registrations (UK and CTM) for the shape of the exterior of three of its models of taxi: the Fairway, and the TX1/TX2 taxis. LTC also claimed goodwill in the shape of its TX1, TX2, TX4 taxis, and the Fairway.

LTC claimed that the defendants threatened to infringe their black cab trade marks and commit passing off by marketing a new model of London taxi referred to as "Metrocab" which, LTC complained, had been "substantially copied from the shape of the TX4". Unsurprisingly, the defendants denied trade mark infringement and passing off, and counter-claimed that the trade marks should not have been registered because they are devoid of distinctive character and consisted exclusively of the shape which give substantial value to the goods.

Average consumer

Before assessing the merits of the case, the judge assessed who should be regarded as the 'average consumer' in this case. LTC submitted that there were two average consumers: 1) taxi drivers; and 2) members of the public who hire taxis. LTC's case appeared to focus primarily on the second of these two options.

Unfortunately, the judge's view was that members of the public who hire taxis are consumers of taxi services, and not of taxis. Therefore, they were not the end users of the goods in question.

Validity: inherent distinctiveness

Before assessing trade mark infringement, the judge examined whether the trade marks had been validly registered.

While making his assessment, the judge was mindful that the average consumer is not in a habit of making assumptions about the origin of products on the basis of their shape or the shape of their packaging, in the absence of any graphic or word element.

In the judge's view, the trade marks would be observed by the average consumer of taxis as simply a variation of the typical shape of a taxi. Further, even if the shape was regarded as departing significantly from the norms and customs of the sector, it would not have been perceived as identifying the origin of the goods. His conclusion therefore was that the trade marks were devoid of distinctive character. He also commented that his assessment would not differ if the relevant 'average consumer' consists of or includes a consumer of taxi services.

Validity: substantial value

Importantly for shape marks, the law says that marks should not be registered if they consist exclusively of a shape which gives substantial value to the goods.

In examining this cause of action, the judge stated that it was key that trade marks are not used to indefinitely extend the time-limited protection of other IP rights. For example, trade marks being used to protect shapes that really should be protected by a registered design. Taking all factors into consideration, including that it was implicit to LTC's case that the trade marks would be recognised as the 'iconic' London taxi, the judge found that the shape of the trade marks did add substantial value to the goods.

Validity: acquired distinctive character

This aspect of the case focused on the proposition that the trade marks had become distinctive to a significant proportion of consumers of taxi services in the UK. However, the judge had already concluded that the relevant average consumer is a taxi driver, not a consumer of taxi services. However, in light of this argument, the judge felt it prudent to consider both.

In relation to the average taxi driver, the judge felt that nothing had been done to educate consumers that the shapes of these taxis denoted the source of the taxis, and therefore they could not be said to indicate origin.

In respect of consumers of taxi services, LTC argued it should be seen as having become distinctive of the source of taxis because: 1) it had a de facto monopoly of taxis having a similar appearance in London for decades; 2) the absence of anything other than shape which could indicate trade origin; 3) it had a policy to preserve the distinctive appearance of their taxis through successive models; and 4) the steps it had taken to educate the public.

In the judge's view, none of these factors, whether individually or in combination, justified the inference that consumers of taxi services identified the source of LTC's taxis from the shape of its taxis. Plus, there is no reason why consumers of taxi services should care about the origin of the taxis driven by taxi drivers. Provided it is a licensed London taxi, and it conforms to preconceptions, the identity of the manufacturer is surely a matter of indifference.

Trade mark infringement

LTC did not suggest that there was a likelihood of confusion between taxi drivers, but contended that there was a likelihood of confusion on the part of members of the public who hire taxis. As noted, the judge had already concluded that the average consumer was a taxi driver. Therefore, the judge's view was that LTC's pleaded case amounted to a concession that there would be no likelihood of confusion on the part of the taxi drivers between the trade marks and the Metrocab. However, in case he was wrong, he also examined the position from the perspective of consumers of taxi services. He found that there was a low degree of similarity between the trade marks and the Metrocab. Because of this, and the low distinctive character of the marks, there was no likelihood of confusion.

Reputation

LTC also argued that Metrocab infringed their trade marks on the basis that the trade marks had a reputation, and that the Metrocab was 'taking unfair advantage of or was detrimental to the distinctive character or the repute of the trade marks'. The judge noted that the Metrocab was sufficiently similar to the trade marks to remind the average consumer of the trade marks, whilst also appreciating that it differed from them. He found that there was no detriment to the mark's distinctive character, and the nature of association which the average consumer would make would be simply that all three shapes were a species of the London taxi. Unfair advantage was not established as there was no evidence the defendant intended to exploit the reputation of LTC's marks.

Defence

The judge also commented that the defendants would (although it was not necessary) be able to rely on a defence which prevents a trade mark owner from prohibiting a third party from using indications concerning the kind, quality, or other characteristics of goods or services in accordance with honest commercial practices.

Passing off

The passing off claim also failed because the judge did not agree with LTC that they had acquired sufficient goodwill to establish that the shape of the taxis denoted the source of the taxis. He also found that there was no misrepresentation as there was no evidence that the shape of the Metrocab was likely to lead consumers of taxi services to believe that it came from the same source as LTC as opposed to just being a licensed London taxi.

In short

This is clearly a crushing outcome for LTC and one that has sparked many interesting discussions amongst IP practitioners. To have its shape trade marks found to be invalid because they are not seen as a 'badge of origin' and because they will be viewed merely as the variation on the shape of a taxi will be disappointing for LTC. It will be interesting to see if it takes steps to appeal some, or all, of this decision.

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